Africa’s economic transformation in focus at UN development financing conference

15 July 2015, Addis Ababa, Ethiopia

A lack of industrialization puts Africa’s long-term growth at risk, a senior United Nations official said today, as participants at the Third International Conference on Financing for Development discussed the economic transformation of the continent.

“Manufacturing has stagnated over the continent during the past decade and makes up a shrinking share of Africa’s exports,” said Carlos Lopes, the Executive Secretary of the UN Economic Commission for Africa (UNECA). “Africa’s growth has struggled to create adequate jobs for its growing youth and the only way it’s going to be able to do it is through industrialization.”

Mr. Lopes was one of several speakers at a side event at the conference in Addis Ababa, Ethiopia, that examined three critical issues for Africa’s transformation: modernizing agriculture; inclusive and sustainable industrialization; and sustainable infrastructure and energy.

He noted that the shrinking contribution of agriculture to Africa’s gross domestic product (GDP) has been accompanied by growth in the contribution of the services sector rather than industry or manufacturing. Industry and manufacturing have been in fact been contributing less and less to the continent’s GDP, excluding parts of North Africa, where its contribution has stagnated.

Africa currently accounts for less than two per cent of global manufacturing exports, Mr. Lopes pointed out. The percentage of manufactured goods in Africa’s exports to the world has fallen from 26 per cent in 1995 to 16 per cent in 2013. As a comparison, manufactured goods make 69 to 70 per cent of developing Asia’s global exports in 2013.

Donald Kaberuka, President of the African Development Bank, called infrastructure the “signature of African development.” He noted that over the last decade during which he has led the institution, the Bank has put out $28 billion for infrastructure. This is almost three times what the Bank has done over 40 years.

“This is because I concluded that the way African economies were growing, it was not possible to grow until we close the infrastructure gap,” he stated.

Giving an overview of the situation, Nkosazana Dlamini Zuma, Chairperson of the African Union Commission, told the gathering that by 2013, only a third of Africa’s population had access to electricity; 65 per cent had access to water; and only 38 per cent had access to sanitation. Also, in 2013, the continent spent four per cent of GDP on infrastructure, compared to 14 per cent by China in the same year.

For a continent with abundant land and water, she noted, Africa imports a “ridiculous” amount of food and suffers from food insecurity. According to the UNECA, Africa imported 83 per cent of its food items from outside the continent in 2013.

Ms. Zuma also stressed the need to move on the “African skills revolution,” and invest in empowering people – the young, women and men.

“We are determined that our generation shall not be one of missed opportunities. Instead, we will remain steadfast in playing our part… to build an Africa that is peaceful, integrated, people-centred and prosperous and takes its rightful place in the world.

Agnes Kalibata, President of AGRA [the Alliance for a Green Revolution in Africa], stated that sustainable and inclusive economic progress is nearly impossible when large segments of the continent’s population are stuck in subsistence farming.

“While African economies have been growing and rising over the last 10 years, the vast potential of its agriculture has remained largely untapped,” she said, adding that evidence shows that investments made in the agriculture sector are considered more effective than investments made in many other sectors at reducing poverty and producing economic benefits and inclusive growth.

“We also know that failing to invest in agriculture and smallholder farmers not only limits economic growth today but can also impede opportunities in the future. If farming families are unable to grow enough to feed their children, malnutrition will continue to grow with a severe cost to the human development of the next generation,” Ms. Kalibata stated.

“As we look to the future, we all share a collective responsibility to ensure that the ‘Africa Rising’ narrative is a reality for all Africans. There’s no way this can be achieved without improving productivity and income for smallholder farmers.”